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Are We Sure States Can't Declare Bankruptcy?

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July 05, 2010 – Comments (18)

John Rubino makes some very salient observations with regard to this topic. While they can't technically go bankrupt, it is looking more and more like they can effectively go bankrupt. This is looking quite bad :(

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Are We Sure States Can't Declare Bankruptcy?
By: John Rubino | Sun, Jul 4, 2010

http://www.safehaven.com/article/17374/are-we-sure-states-cant-declare-bankruptcy

[excerpt]

Saturday's New York Times has an article on Illinois' finances that is must reading for anyone who thinks the U.S. has turned the corner. The crucial takeaways are 1) even though states can't technically declare bankruptcy, they apparently can just stop paying their bills, 2) while salaries and pensions for current public sector workers are untouched, services that provide lifelines to the most vulnerable are being decimated, and 3) though Illinois is arguably the worst-run state, a whole bunch of others are close behind, so what happens there will soon be replicated across the country.

Illinois Stops Paying Its Bills, but Can't Stop Digging Hole

18 Comments – Post Your Own

#1) On July 05, 2010 at 11:05 AM, ChrisGraley (30.25) wrote:

+1

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#2) On July 05, 2010 at 11:12 AM, dbjella (< 20) wrote:

Illinois appears to be in trouble :(

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#3) On July 05, 2010 at 11:38 AM, ragedmaximus (< 20) wrote:

Pull all troops out of the war now ,why waste another taxpayer dollar.Next downsize Govt. It's overbloated.Next one more paymentof our debt to other countries,final paymen no more bucko ,hit the road jack.Next eliminate WELFARE no more handouts for people that want to multiply and not work essentially crippling society with drug dealers, gangbangers and tying up the court and police system.If you don't work you starve and die plain and simple. Next eliminate corrupt healthcare system which is draining everyone except politicians.Make jobs a priority with new business loans etc.Make it easier for businesses to expand not shrink which is what is happening now.do all these things and AMERICA can get back on track. Don't and it's a small downward spiral until it gets so bad the REVOLUTION starts!

 

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#4) On July 05, 2010 at 11:51 AM, blesto (31.64) wrote:

+1 rec

2 words come to mind; "Austerity Measures".

3rd we may all need to swallow some better medicine, but as the saying goes, "a spoon full of sugar...."

Long IPSU on CAPS and looking at a possible buying op.

Image and video hosting by TinyPic" target="_self">IPSU 10 yr chart

 

 

 

 

 

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#5) On July 05, 2010 at 12:08 PM, binve (< 20) wrote:

ChrisGraley ,

Thanks!

dbjella ,

Indeed :(

ragedmaximus ,

I can't say I disagee. There is just so much unsustainability in the actions by the government

blesto ,

Thanks!

And regarding sugar, I definitely agree. I have discussed it a few times on my other blog.

See this post Rumblings from Mt. Bear and this chart in particular: chart of sugar. Also see this conversation.

Thanks!..

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#6) On July 05, 2010 at 12:34 PM, cthomas1017 (77.02) wrote:

"Make jobs a priority with new business loans etc."  And who exactly would you propose should decide who should receive those loans?

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#7) On July 05, 2010 at 1:51 PM, uclayoda87 (29.51) wrote:

If Illinois wants to know what its future will look like they might want to visit Detroit.

 

The governor of MI has already resigned herself to what Detroit has become, a prison.

 

Social planning ultimately leads to the loss of freedom.  Not a new idea but one that deserves remembering:  The Road to Serfdom. (in an easy to understand cartoon form).

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#8) On July 05, 2010 at 5:21 PM, cthomas1017 (77.02) wrote:

Funny you should bring it up.  I was at an art gallery in Detroit over the weekend.  Among the other overpriced pablum was a tribute to Fidel & Che.  I suppose when a large part of a society aspires to rise to the successes & contributions of Cuba, they are able to achieve it with very little effort.  That said, the dancing was a great time. :o

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#9) On July 05, 2010 at 10:44 PM, dwot (97.03) wrote:

I saw the article earlier.  What a mess...

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#10) On July 06, 2010 at 1:47 AM, Beorn10 (29.96) wrote:

I do see some hope for state legislatures.  As the problems become too difficult for lawmakers to deal with, they may choose to leave office and have someone else take the heat for the painful solutions which are needed to correct the problems.  The infusion of new people into government who are willing to cut spending and reduce state programs will be the ultimate achievement of the Tea Party movement.  Only when fiscal sanity is restored can a real recovery hope to emerge.

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#11) On July 06, 2010 at 7:54 AM, whereaminow (42.76) wrote:

They should repudiate their debts.  Many State legislatures did so in the 1800s.  Unemployment fell, govenrmnet expenditures plummeted as creditors balked against future lending (a good thing!), and the social planners had to go out and get real work.

Public debt and private debt are two totally different things.  One is entered into via coercion, and the other by voluntary exchange.  The former should be repudiated. 

David in Qatar

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#12) On July 06, 2010 at 9:08 AM, binve (< 20) wrote:

uclayoda87 ,

word

dwot,

agreed

Beorn10 ,

>>The infusion of new people into government who are willing to cut spending and reduce state programs will be the ultimate achievement of the Tea Party movement.

Any change from the crappy short-sighted governance toward something more fiscally responsible will be welcome

whereaminow ,

>>Unemployment fell, govenrmnet expenditures plummeted as creditors balked against future lending (a good thing!), and the social planners had to go out and get real work.

AMEN!! I completely agree..

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#13) On July 06, 2010 at 10:38 AM, outoffocus (23.59) wrote:

Dollar is down and gold is down.  Whats wrong with that picture?

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#14) On July 06, 2010 at 10:41 AM, binve (< 20) wrote:

outoffocus ,

>>Dollar is down and gold is down.  Whats wrong with that picture?

Just a funny reaction. Sometimes gold and the dollar are positively correlated: See this chart..

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#15) On July 06, 2010 at 9:02 PM, blesto (31.64) wrote:

 binve

Very interesting chart. Equities out paced gold for a good while Crossing in the 80's and now recently crossing again.

Does that have anything to do with that "death cross" you were talking about in another post?

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#16) On July 06, 2010 at 11:55 PM, binve (< 20) wrote:

blesto,

Thanks man. But no, the death cross a specific measure of the strength of the equity rally based on 2 key moving averages. It is forecasting intermediate term weakness...

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#17) On July 07, 2010 at 1:17 AM, Starfirenv (< 20) wrote:

Thanks B-Man, always appreciate your work. Why don't you pull a McBags and link to MTandA for the "rest of the story".
Rec. Regards.
PS- I think your call on bonds is about ready to happen.

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#18) On July 07, 2010 at 8:17 AM, binve (< 20) wrote:

Starfirenv ,

Thanks man!

>>Why don't you pull a McBags and link to MTandA for the "rest of the story".

Because I use these two blogs for two different purposes. And being that TA is less than well-received by the Caps public at large, I figured that most who wanted to check out my other blog would have already done so :)

>>PS- I think your call on bonds is about ready to happen.

Thanks man, I think so too...

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